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Squawk on the Street

News/Business. Melissa Lee, Carl Quintanilla, David Faber. Opening bell market action. New.

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03:00:00

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Virtual Ch. 58 (CNBC)

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mpeg2video

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ac3

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TOPIC FREQUENCY

Us 20, China 19, Europe 16, U.s. 14, Apple 12, Greece 12, S&p 12, Jim 11, Starbucks 9, Spain 9, Sandy 8, Washington 7, Paul Jacobs 7, Obama 6, America 6, England 6, Geico 6, Qualcomm 6, Boehner 6, Grover 5,
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  CNBC    Squawk on the Street    News/Business. Melissa Lee, Carl Quintanilla,  
   David Faber. Opening bell market action. New.  

    November 8, 2012
    9:00 - 12:00pm EST  

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that looks cool. >> yes. >> they have the scene in the conference room and pretending to be some guy in a company and hoping no one notices him pretending to be the ceo. join us tomorrow. "squawk on the street" is next. good thursday morning. welcome. i'm melissa lee with carl quintanilla and jim cramer live from new york stock exchange. david is on assignment today. look at the futures. the day after the day after. a huge selloff across the board in the markets with the markets closing at three-month lows. right now looking to add. the s&p 500 with an applied open up three points. in europe, a lot of action there. mario draghi holds the press conference. rates unexpected and seeing slight gains in europe. road map this morning starts off with stocks struggling to
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recover from the worst drop of the year. juggling a ton of information today. comments of draghi as we mentioned, bank of england freezing qe, a power shift in china, a capital plan of jp morgan and earnings of 14 s&p 500 companies. >> mcdonald's same store sales a key macro data point and october was not good. global comps go red for the first time in nearly a decade and the u.s. underperforming. any doubt now that rivals are stealing share? >> retailers like macy's finally quantifying the effect of hurricane sandy. walmart kicking off black friday earlier than ever. we start this morning with the markets looking to bounce back from yesterday's selloff and nearly 1313 drop in the dow. europe on wall street's radar after the ecb and bank of england kept key rates unchanged. draghi holding a press conference right now saying he
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sees economic rekafr ri remaining weak and reforms are crucial to boosting growth potential on top of greece passing an unpopular package of austerity measures on wednesday and necessary for greece to receive another round of international financial aid. china's ruling communist party congress con vealing today in a leadership change. so much to digest overseas, jim. what came out of the ecb is expected. came out of greece seems to be largely expected. but spain still resisting. a bailout. that's trouble. >> i know. every day the crucial -- that's the crucial link. you have to give them the good loans. take away the bad loans. create a situation of two banks and they're gone from 760 to 708. i think that there is hope in china. i think that china's been amassing some good news. >> oh man. >> and they can put in a new
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government and does matter. >> some of the targets. they went to double per capita income within the next eight years. talk about aiming high. >> i thought that was amazing. it's a command economy. maybe they can pull it off. if they do it, they can take the whole world with them up, up. >> the governor hinting perhaps the data to be released tonight, tomorrow in china, will be better than expected. hinting at continuing slow growth. slow but it is growth and that's the important thing coming to china. we're getting notes and recognize there's certain china stocks. truck engines. we are seeing that last month was good. now, that's very contrary to what a lot of other retail and people saying retail commentary, distorted by the weather. but this china trade is gaining momentum, not losing momentum. at the same time that i feel that united states is losing momentum. >> interesting comments out of the boe. we knew that central banks doing nothing and governors now
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saying, qe which they have been pouring on for a long time, going to flatten out at the asset purchase levels and not having the impact. >> china trade. second is housing. i think they haven't done enough to be able to revitalize to be what i regard as the housing part of the gdp. they seem to be happy with the 1% gdp. lower the expectations but don't take it down to the point of really excited about 1% gdp. we need 3% to get a little going here. >> people argue markets driven by old friends, right? the sovereign debt crisis in europe and the fiscal cliff here. today "the washington post" trying to read the tea leaves. what was boehner saying? does the white house have a mandate? are the next six weeks, eight weeks going to be about watching political posturing, trying to
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trade off of that? >> unfortunately. grover norquist in my class in college and he was an outlier then and he's not now. everyone's shifted so far to the right in politics. even the left, you can argue the democrats shifted because they can't spend like they used to. if he is in charge of the party, i think there's a fiscal cliff avoid answer. i don't know if he is. >> were you encouraged by what was said yesterday? hard to tell. early days. >> everybody's been encouraged is fooled. fool me once. i think that the proof will be real change within the hard right tea party of the republican party. because, i mean, look. i think that obama, whether you like him or not, obama said you raise revenue. have a talk. boehner did mention raising revenues but does he have people in the tea party wing this agrees with him? i don't know. what do you think? >> i don't know.
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i mean, in the meantime, speaking of sort of regulatory issues, jp morgan today with the capital plan they say is regulators say is okay. >> yeah. >> 3 billion buy back in the quarter. next quarter. >> checked with them. that's the stock that came down because romney lost and very hard to relate on the loss versus dividend increase and buy back but i think the overreaction in the banks was considerable yesterday. i look for them to stabilize. >> brings to mind an upgrade today. >> an upgrade of isi and they expect increased dividends and buybacks and every time they buy back shares, the intangible book value goes up. and bank of america was one of those stocks hit very, very hard within the financial sector in yesterday's selloff. down 7%. that was the steep decline. this call this morning, very bullish. $18 a share by 2015. >> i know. wow. >> 18 bucks. when's the last time it was $18?
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>> 2000. >> 2007. i don't know. >> i think it was -- went up there in 2010 before it slid down and senator-elect warren is an important figure in terms of getting headlines. she is compelling. she is able to make a lot of noise but she doesn't i think in the end control regulatory regime and put in place. she's just able to back and very effective barber by the way. >> right. >> if that dynamic changes then banks have to recompute, right? right now she is a figurehead of sorts. >> yesterday isn't that the recomputation of the banks? warren was voted in and a sentiment there needs to be or a desire for increased regulation of banlgs and not dodd-frank but elizabeth warren elected to the senate. >> she is a wild card. i was bashing her repeatedly on "mad money" and she said will you break bread with me. she's compelling and looks at you and says i don't like this
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but i like this. i like the way american express is handling itself. suddenly you think, maybe there's gradations. she is not nearly as unreasonable as the press indicates. she has a model she likes with the banks and a model she doesn't and those in the wrong will be in her wrong will be in the crosshairs and headlines. >> all right. fewer people sitting down with mcdonald's lately. shares down in the premarket. the giant announcing the first monthly same store sales decline on a global basis since 2003. u.s. and europe down each 2.2. asia pacific and middle africa down 2.4. the ceo says it's the challenges of the global marketplace but adds he's confident the strategies and adjustments will build momentum and profit growth. stocks getting kind of cheap here, jim. when's going on? >> i'm confused. i don't get what they're trying to do. i happen to like mcdonald's very
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much abe go there a lot and i don't understand why they have promotion alg prices but they're not promoting. to me. dunkin' donuts. i'm spending $5.07. for mcdonald's spending a buck, buck six with the tax and i say, why don't you guys tell people about this? this is like a great promotion. they look at me like i don't know. i don't know why we don't. i think that's a company right now lost the way momentarily but i think the stock not going -- >> towards recovery is admission, right? >> right. >> admitting they have a problem. >> yes. >> if you think they have admitted they have a problem, what's the next step at this point? right now the stock nearing the 200-day moving average and heightened competitor pressure and other fast food chains
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cutting prices and responding. >> but before the show, our question was who? wendy's quarter wasn't exactly -- >> terrible. sales, too. >> i mean, if you're going to compete on coffee on price, we've been told don't compete on price. that's the big mcdonald's promotion right now. people like to get coffee in the morning at mcdonald's. i think mcdonald's is static. and the other guys have come on. starbucks quarter magnificent and didn't hear the bemoaning of the economy this time. when mcdonald's is bemoaning the economy and the buck coffee and starbucks with the five buck coffee and not bemoaning that means while they're admitting they have to stop blaming the stars when the fall indeed dear brutus is in yourself. >> brings to mind the ever-growing complexity of the starbucks green mountain keurig -- i'm losing track of
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what is going on. who's friend and who's enemy? >> herb greenberg is -- made it -- go on twitter and has the release. he's saying they're taking aim at starbucks. those who have taken aim at starbucks over time are idiots. it's worked. you want to be partners with starbucks. not enemies. worldwide. india, starbucks doing very, very well in the initial and green mountain doing best to try to bury the hatchet before it's buried through their head. >> anyway, retailers we should note and talk about retailers this morning upping the ante for the holiday shopping season. walmart beginning the black friday sales on thursday and starting thanksgiving night, the earliest ever to start those sales. meantime kohl's forecasting a rise in sales in the holiday quarter but earnings guidance
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for the current quarter is below wall street forecasts. >> they had momentum there and kind of took the wind out of the sail. i still don't like the presentation at kohl's versus target. these door busters, these prices, i think that america's eyes glaze over or go to amazon prime. i know that you're going to get crowds and certainly going to get media but this is something where i just feel like costco's model of, listen, we're good, low prices, going to do better than this big thanksgiving promotion. walmart is expensivexpensive. >> they're saying they'll feel an impact of sandy and sticking to the guidance for the fourth quarter and did surprise many analysts yesterday and a nice upside surprise. >> that's even whole foods noted problems with sandy. >> right. >> this group is really hard.
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this is a fiscal cliff group because if you have less disposable income, you don't want to be in the chart hideous. but the group snapped back over and over and over again and less of a group by the way. the pa paapparel stocks are goo >> at large discounters, retailers in general. >> i think the dollar stock comes down too much. they have come down hideously as if we were able to get a better economy and then slipped back. i like that group as being a little cheaper than the rest. >> yeah. your point's great about how it's been hard to knock them down. they're like weebls. >> they're incredible. >> but we've been heading in to the super bowl of that sector. >> right. >> yes. >> the comments on inventory at kohl's well above the plan. even if you think the stock's cheap, it is not without risk. >> no, it's not. the executers continue to execute.
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i would'm not surprised if nordstr nordstrom's doesn't deliver. terry at macy's, that was a bold call to do the numbers. he's a bold guy and he also bond opens this weekend. "sky fall." >> reviews are good. >> he is the next bond after daniel craig apparently. >> terry lundgren? best golf game of any ceo. amazing. >> of the ceos most jealous of in terms of -- >> handsomeness. >> got it all. >> sophistication. >> jealous of you, terry lundgren! >> the ceo who loved me, right? >> yes. >> on her terry secret service. >> good one, good one. i like that one. >> we'll keep an eye on terry. macy's. nordstrom and disney tonight. a busy night after the bell. >> disney is in the sweet spot. the jeff bukus conference call for time warner yesterday that was stop trading. that's one of the best i have
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heard. everything's going right for them whether it's the men and hbo and last "dark knight" and making so much money with tbs, tnt. congratulations. you have really figured it out. they know how to make content and do tv. now, comcast, our owner, also delivered. cbs delivered. disney could deliver. there's something about the industry. news corp. delivered and attracting really good executives. very positive. >> absolutely. when we come back this morning, qualcomm with a lift of better than expected numbers, upbeat guidance. the chairman and ceo paul jacobs. a sense of what's working for them and where the iphone 5 fits in. also, this nor'easter and they named. we don't know why. dumping heavy, wet snow on the same region reeling from sandy. 5.7 inches of snow in newark. that is the most for november, a single day ever. unbelievable. we'll look at this storm's
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impact coming up. another look at futuring struggling to find stability after yesterday. we'll see how we do when "squawk on the street" comes back. up. a short word that's a tall order. up your game. up the ante. and if you stumble, you get back up. up isn't easy, and we ought to know. we're in the business of up. everyday delta flies a quarter of million people while investing billions improving everything from booking to baggage claim.
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about a week after superstorm sandy hit the east coast, a nor'easter is taking a
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toll on regions trying to recover from sandy. tens of thousands of customers that had power have once again lost electricity. maria larosa has more on the impact. maria? >> reporter: good morning. you can see wind a huge factor right now especially close to new england. i'm south of boston. take a look. you have the boats in the water and that water is churned up. the winds consistent, 30, 40, close to 50 miles per hour sustained. over the last several hours. seen gusts still clocking in at 60 miles per hour. we had a report out towards the cape of 60 miles per hour and nantucket with a peak wind gust of 68 miles per hour and seeing reports with the consistent winds of some coastal flooding including high water over the roads in nantucket. a few trees down and led to scattered power outages. you can see behind me, higher water this morning and we are
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now not at high tide and not seeing the stray come up and over. that was a concern, as well. when's interesting about this storm is winding down and pulling away, wind is still going to be such a huge factor. easing winds means 20 to 30 miles per hour as we get in to the evening opposed to 40 or 50 miles per hour. but that's going to be the case even going through the end of the day today. snow not so much an issue along the coast. it's been the wind and the rain but inland picking up several inches of snow in the evening rush last night. it looks like they could get a little bit of an icy mix through the next few but overall precipitation easing up and checked at boston logan, no major weather-related delays, not yet. back the you. >> maria joining us from massachusetts, thank you. well, saying good riddance to yesterday's selloff. what do you do now? follow cramer. later on, what goes up must come down. is that true? breaking out the graphing calculator for the warning signs to keep you from becoming
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another variable on the minus side of the equation. futures one again. weakening here a little bit. the dow at 15 at the open. much more straight ahead 36 i'm only in my 60's...
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see why millions of people have already enrolled in the only medicare supplement insurance plans endorsed by aarp. don't wait. call now. . 6:30 to the bell. let's get cramer's mad dash watching interesting guidance out of whole foods. >> yeah. lighter. i don't know whether they're ultra cautious. the stock trading around 30 times earnings. that's very hard to do. comp store sales were good.
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gross margins good year over year. they talk positively about the long-term trend. i think it's intact. i expect the stock weak today. >> others point to netflix, to chipotle and other stocks where they brought in sales projections. >> exactly. and i think that that group does trade together, carl. i love this team of rob and mack i can and doing a great job and continue to expand. i want to buy a big boost in the dividend there. they're really well run. they talked about sandy and problems. this is a big theme. >> talking to paul jacobs after the bell. >> if there is hope for today, it is going to come from qualcomm and unmitigatingly positive conference call filled with great things of 4g and china strong and demand for smartphones off the chart. no more supply constraints. the ceo can make a difference
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today with tech. he might. this was an amazing call. >> trying to tamp down some of the concerns about a shortage of chips. >> oh my. data demand continues to grow. amazing spewing of cash here and whole foods spewing cash and talking about really things playing out globally in a way that is such a -- this is a gloom buster. we talked about door busters. if you read this, you think, a-ha. this is a place that's growing in this country. and in the world. and it's smartphones. >> yesterday you stood here and you said the easiest call to make if you were at goldman still to tell a client to trim. >> yeah. >> what's the tone today? >> they did that. today's the second day realizing let's is an i opened ap and goes to 900 and sold it. i have a $100 basis. maybe better to sell it now. i would rather have a resolution in washington even a bad one
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than no resolution. you're taking action and selling. >> jim after the break, we said, qualcomm one of the big winners today. paul jacobs to tell us why the wireless chip maker is giving upbeat guidance and apple, too, and whether the giant can claw out of the bear market territory. that's delynn nated at 564 and coming up after the opening bell. we don't call this our company, we call this our mission. green toys teaches children that if i have a milk jug and i stick it in the recycling bin it can turn into something new. chase allows us to buy capital equipment to be able to manufacture in the states to the scale we need to be a global company. with a little luck green toys
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he loves risk. but whether he's climbing everest, scuba diving the great barrier reef with sharks, or jumping into the market, he goes with people he trusts, which is why he trades with a company that doesn't nickel and dime him with hidden fees. so he can worry about other things, like what the market is doing and being ready, no matter what happens,
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which isn't rocket science. it's just common sense, from td ameritrade. opening bell still to come in just about 50 seconds or so. interesting day shaping up. of course, a lot of damage done yesterday. the worst dow drop of the year. worst s&p point drop of the year. all 30 dow stocks lower. all ten s&p sectors lower. first close below 10,000 since august 3rd and first below 1400 since august 30th, jim. >> hard to go up at the end. with the euro. dollar theme too strong. i also like to see gold going up just because i like to see economic movement. i went to see oil sustain a little gain here because, boy, that's down four bucks. >> someone wrote almost as if
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people were expecting a recession. >> yeah. >> there's the bell. and a look at the s&p. where we'll keep a close eye on the threat today at the big board. agricultural company but -- >> very nice. >> thank you. celebrating on the n yse. at the nasdaq, celebrating the ipo. it's a smaller name to start with but seeing price action. >> a lot of action thanks to mr. carl icahn. over the course of the week, increased the stake twice. beginning of the week at 8.7% and moved to 9.57% and now it's 10.68%. unusual activity in this video game maker. >> somewhat of a very big value trap, these video games for a long time. i have to tell you, when electronic arts reported, the stock rallied, too. maybe there's a hope springs
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eternal trade but i think they're passe. i think the country moved on that ea conference call and the stock held up,ical how, you know, there's just no momentum in the group. i love to know what carl has up the sleeves for the plans of take two. maybe we can ask him. also watching -- hint, hint. i know he's not watching. >> wakes up later. >> makes deals in the evening. >> doesn't watch the show? how can you not watch your shea? >> we have address apple. that's a reason why the markets declined yesterday. certainly precipitated the decline with apple 4.85% weight in the s&p and entering official bear market territory from september. here we have apple recouping the losses there. on a technical basis, jim, and a
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fundamental basis, you can make a bear case. i don't think there will be the itv everybody's looking for. >> at all. >> you kind of get time warner cable. you have to get optimum -- you've gt to get comcast in a room and beat the heck out of them like steve jobs did of sony and i don't see cook as beat up and cheap which is what you had to do. >> right. >> i think the cable companies are hard to roll because they're all making so much money. i work for comcast and comcast operating cash flow so great i think they can tell apple, here's how the itv has to work. this is the fiscal cliff stock. hey, is the rate 40, 28? all i know is it won't be as good as now. retirement accounts, i don't know if they're basically trading and selling it off the chart. inexpensive stock. where are the new products? devastating on cnbc interviewing
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yesterday. i believe that itv could be stillborn. >> if you believe it's not in the picture, when's the new product category to invent and put forth? can it continue to exist on rit rations of the current product cycles? how many ipad minis can you do? you have different case covers and then market it as a new product? that's not enough. >> no. >> i'm hearing from you, a downturn on apple. >> i go back to the day of the jobs and -- >> now free to talk more than he has. >> i felt that he was -- listen. been a year since he agreed not to talk about new products and great writer maybe einstein or ben franklin. my favorite writer going in america. i worked for him at "time" magazine and no omg in that product list. there's no omg. i need omg to keep momentum. look. an inexpensive stock with cash and do a lot with the dividend
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and when he said that to me, i decided to trim for the charitable trust. i just had to. it was devastating. i knew jobs better than anyone than his family. >> with cash and credible sales still margins trading at, what, about 11. what kind of discount do you out if a stock like that for only selling well and instead of the next -- >> at 558 guess to a 12.6 multiple. >> look. if i knew there's a resolution of the fiscal cliff or the capital gains rate at 25%, then i would say, probably not worth it to sell because they can come up with an omg factor. remember what jobs said in the book. cook is not a product guy. >> no. jobs had lunch every day with who? johnny ives. >> that's the positive. he can deliver and the stock's inexpensive. fiscal cliff says sell until otherwise.
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itv says sell until otherwise. i need to see something from apple that says, you have no idea what we have in the pipe. because they say there's nothing. >> man. it's hard to imagine this conversation three months ago. >> there it is. terrific guy. but because this was the kickoff of the -- i wanted to interview him for the fund drive and love the school. my friend's a professor of business and i was just, oh, i sat back after no omg. i said omg. >> all right. let's check on bob pisani on the floor with more. >> hello. happy thursday, everybody. a lot calmer on the overnight. mr. draghi didn't say anything too controversial or market moving today. the worry for stocks right now, the general anxiety on the floor. additional sell on capital gains worry and there's a lot of questions about how long it's going to take. we need the address this soon and the capital gains from 15%
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to 20%. not so bad. 15% to 43% is a catastrophe and the uncertain is gnawing at people. make a deal sooner rather than later. people trying to figure out how long does it go on? one potential beneficiary of capital gains uncertainty is etfs. exchange traded funds. most etfs never distribute capital gains. voila! solve the problem. if you're worried, buy etfs here. when taxes goes up, tax efficiency is an important issue. i expect you hear more about that in the coming days. if it looks like the fiscal cliff will drag on for a while. prices 2% to 3% lower than yesterday. interested in buying? already middle on the banks yesterday. you know the debacle of the banks and preopen. looks like they're opening on the positive side and volume is not heavy at the open. how about sansandy? did you read kohl's. they didn't specifically say,
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all right, we are conservative because of sandy but you can bet that's a part of it as well as the general economic weakness. you can hear it from a lot of companies with more skconservate guidance. the hall of nerds in europe. spain sells long-term bond auction. this's good news. no. that's bad news. yields go up in spain. less likely for the ecb to start buying bonds and less likely that spain will ask for a bailout. this is the hall of mirrors again and good news is bad news and bad news is good news. doesn't make a lot of sense to me. jim, did you see what happened with the greek parliamentary vote? when they were preparing to vote at midnight, the greek parliamentary workers working with the parliamentary officials read the bill and discovered that the cuts including salary cuts applied to them! and they walked out. the greek parliamentary workers walked out discovers it applied to them. chaos for a while and then they came back in and helped prepare
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the bill and it finally passed but that's the kind of -- let's call it circus that greece has become these days. back the you. >> yeah. all hail greece. thank you, bob. let's shift to bonds. down in chicago, rick, good to see you in new york. good to see you. >> i think i got the last plane out of dodge. and of course, i feel sorry for everybody on the east coast who has to go through this again. and in terms of the marks, we are not going through the same thing again. look at these two-day charts. i find sometimes so revealing. our ten-year or the ten-year overseas or the euro currency. today's moves much more sideways and the proactive plays were yesterday. obviously, same thing in large part can be said at this point in the day for equities but why is that so important? because just think about europe. maybe the eye of the hurricane can be calm for months, maybe
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for quarters, maybe for years. and it seems to me like the strategy in many continents is a stabilization strategy. and in that regard, it seems those stabilization may last. the bazooka of mario draghi isn't fired today. the news conference with very little impact in the marketplace and many ways that's success. is it really? how long will it last? you the investors have to figure that out to invest in the eye of the hurricane and do well. but when you start to hear the high winds approaching, kind of like that nor'easter, that's when things are going to get dicey and i really don't think memos go out before it happens. jim, back to you. >> thanks so much. the latest news in energy and metals. i hope oil comes back up. let's go to sharon epperson at the nymex. >> jim, we are seeing more trade in the oil market but that's after the biggest one-day dollar and percentage decline we have seen all year in the price of crude oil. we are looblging at oil prices
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right around the $85 a barrel mark here and looking at some support perhaps of the greek austerity plan and also some weakness that could pressure prices based on the economic data out of germany. we're continuing to watch the volatility here in the oil complex but when you look at it, really, we're right where we were at friday's close so basically where we started the week. also keeping our eye on the gold price. the key level traders say is 1721 for gold and the high we reached earlier in the session in this session and we're continuing to watch whether or not the fact that we're going to give a continuation of the fed monetary policy wins out over the overall weakness this week in the complex. keeping our eye on it. natural gas also coming up. back to you. >> thank you, sharon. an upbeat outlook giving qualcomm shares a pop. paul jacobs on how the wireless
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chip maker is capitalizing on the smartphone landscape and look at the early movers. qualcomm topping that list. stay tuned. ♪
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yam come shares higher this morning after revenue that -- quite simply a blowout and gave a bullish forecast for the current quarter and the year ahead. joining us first is paul jacobs, paul, how have you been? >> i'm doing pretty well today. >> okay. let's talk about it because i didn't see any flies on this one at all. you said data demand continues to grow. you talked about higher end of the markets seeming to play out and said that china demand is very, very active. what kept the stock back is supply constraints and finished, aren't they? >> well, we are working our way through. we said that we'll be having supply and demand aligned by the end of december. so we still have a little bit of supply constraint this quarter but if you look, you know, chip
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quarter over quarter projecting in the midpoint an increase of 32 million chips from last quarter to this quarter. so things are growing pretty well. >> at the same time, it seems like you're putting cash to work. you boosted the -- you have paid a lot in dividends and purchased the repurchase. if the fiscal cliff comes to fruition and tax dividends and keep the capital gains rate lower, will you switch entirely and buy back stock and no longer focus on the dividend as something of growth? >> i don't know. you know, the board makes those decisions and we really have been trying to get something around -- something related to the cash flow and so i think we would continue to pay dividends. what we're hopeful for, of course, is corporate tax reform as part of this fiscal cliff resolution. if that happens, then some of that almost $16 billion that we have offshore can come back home and go to work. >> and last thing, for me, apple, i know you can't
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specifically talk about apple but samsung, it seems like these smartphone carriers, smartphone makers have to be doing well based on your outlook. >> oh, yeah. i think -- if you welcome at the smartphone numbers, over 300 million sold in the first half of the year. that's up 45%. you look at the knock on effect to us. you know, we had average selling prices go up 6%. that helps the licensing business. we tripled the shipments of our flagship snap dragon chip and, you know, so things are really going strong on the smartphone side. >> and paul, the way you broke down the upside to your forecast race is that most of that is driven by mobile phones opposed to other devices. do you see over time a gradual diversification in terms of tablets being a bigger part of the mix? >> i think so. we will see tab lets continue to
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grow. obviously, we just had the big windows rt launch, which is windows running on our chip set. we're cautiously optimistic about that. if that really takes off that could be some nice upside for us and computing is changing from being about something you sit at your desk and do and something you do on the go and you want to have even on a pc kind of form factor you want it always on and instant on and always connected much like the way the smartphone works and plays to our strength. >> right, the cautiously optimistic language, that's the same language of the call yesterday and struck out to me. why cautiously optimistic on a windows rt device? why not optimistic? >> we are optimistic in the sense of investing r&d in it but in the guidance we didn't want to go so far that we had, you know, to put risk in to the guidance and so we are really waiting to see how consumers and enterprises adopt this technology.
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i think it's great. i'm not the only consumer out there. i learned early on in the career, don't design products just for myself and waiting to see how consumers adopt these things. i think microsoft did a great jb on it. and now we need a lot more apps and more devices to ship. >> you got your finger on the pulse of so many different products, paul. you must have a guess how it's received. there must be a reason why you say cautiously optistic and how consumers receive the product. >> it's just, you know, you never know. a new product comes out. if everybody knew how consumers would react to things every hollywood movie would be a blockbuster. >> true. >> i look at it and say we'll build the enabling technology and be here and make sure that we make the investments in r&d so that we can build the next generations of products to be better an better and hopefully that wave comes in. you think about the smartphone
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wave to hit, we kept ourselves prepared. we built the products the right way. and when it hit, we're ready to surf the wave and we feel the same way about tablets, prepared and ready for the opportunity to hit soon. >> you mentioned the billions of dollars to hit home. there's some reports that fox con is planning or exploring plans to build some plants in the united states. detroit and los angeles a couple of cities they're considering. would that money go toward u.s. infrastructure, u.s. jobs? give us a rough idea of how that money might be deployed. >> yeah. so we would do both. obviously, more investment. we are growing substantially in the united states in terms of jobs. probably two thirds of employees already in the united states. even though about 95% of our revenues come offshore so we're very focused on growing in the united states. we think that we have great talent here. but of course, we are not a team
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with big factories. we are called chip designers and somebody builds them for us. we hope to see growth in the united states. i mean -- >> all right. we were going the lose that shot at 9:50 eastern time. >> the edge on that one. >> you want to use every single second. >> someone like paul jacobs. >> people. at home should know we knew this was coming and didn't want to let you down. bet tore hear from him than from us. this is the most important guy trying to save the market today. >> right. >> and so we did go over and that's what happens. >> you asked the question that's on our minds and you have a lot of cash. generate a lot of cash and the fourth quarter generated 1.25 billion dlar. $26 billion of cash in the sheet and $10 billion here in the united states and what do you do with that money? they have a dividend yield of 1.6%. what do you do with the 10
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billion? >> he made it sound like it's to the board and maybe he does have something. when i look at what's bothering me, it's fiscal cliff. possible slowdown. you come back and say the bank of qualcomm, the bank of intel, the bank of general mills, these companies, the bank of pepsico. they have a lot of cash. >> goldman sachs, i cited this note yesterday and september 21st of special dividends and why. part of the reason is the cash in companies' balance sheets increased 55% i believe the number since 2007 and also entering the seasonally strong period in terms of special dividend payouts. typically happening in the fourth quarter and not only the push of the fiscal cliff and tax policy changing but we have the seasonal affect of the fourth quarter being the time for companies to declare a special dividend. >> you want the hang on. >> although, i mean, i don't
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know. they say is a dividend is the last thing to deploy money. means they're out of ideas. never see the propellant of the economy unleashed. >> i like it. if caterpillar would raise the dividend, it would make me say think think it's great. but whool foods -- mack and rob, they're different people. they're fabulous business people. fabulous. >> when we come back, cramer's going the look to beat the plot. the lowdown on names worthy of your attention. six in 60 is next and then mcdonald's with a same store sales decline. should you stay away? "squawk on the street" coming right back.
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well, they call it six in 60. i think it's how many we want in 60. universal display. >> could be the worst quarter of the reporting period. i don't know.
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lots of downgrades. didn't deliver by any means. >> upgrade of linear tech. >> i just did this because it show yos you the coat tails of qualcomm. >> upgrading? >> i don't trust this. i think the utilities under pressure of politicians who don't like the fact that power didn't come on immediately. working hard. >> monster call. >> basically saying, stop it. october was good and we have less caffeine than your regular cup of coffee and then saying why do people drink it? i thought it was to get the caffeine. interesting conference call. >> mentioned the upgrade of b of a and now goldman. >> no one likes the stock. suddenly there. >> and then sand bridge? >> put it together. he has to leave. this is tom ward corp. good luck with this. >> what's happening tonight? >> okay. we have henry shine, this is a company that's a nonfiscal cliff. i like a little medical.
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i call it popeye's from philadelphia. other people call it popeye's. i could not have the crawfish special in new orleans because my daughter is a vegetarian and maybe crawfish for the show. >> i know you'll work it off. it's the 4:00 a.m. workout. >> good one today. >> good one today. as you know, apple in the bear market territory. we'll ask a long-timeshare holder if he's adding or pairing the position. walmart starting black friday on a thursday. the holiday shopping season wars have begun. how do you play them? that's when we come back.
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welcome back to the second hour on "squawk on the street." watching the markets carefully after the big drop yesterday, the worst of the year, in fact. chi in's changing of the guard. draghi not firing the bazookbaz. what's next? >> apple entering bear market territory. we have a shareholder to share whether he's adding to the position or trimming. wall administrator's kicking
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off black friday earlier than ever before. when's it mean for the big box competitors? golden arches maybe not so golden anymore. october same store sales missing and underperforming. just how much market share are competitors stealing? >> meantime, markets trying to make up ground this morning after yesterday's selloff of a nearly 313-point drop in the dow. question is, where do we go from here? president and portfolio. michael jones, chief investment office with river front investment group. good morning to you both. >> thank you, carl. >> thank you. >> mike and mike. cramer said a few moments ago that despite what happened yesterday, the natural tendency this morning at least for him would be to continue to trim. what do you think? >> you know, yeah. certainly if you've got gains we're coming in to year end. you've made some money and definitely a time to reassess
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your portfolio in light of the election results in the can if you will and seeing focus from the elections immediately in to the real issues that we have going on. fiscal cliff issues, europe. tax reform. regulatory reform. you have named them. investors are positioning those portfolios accordingly and taking profits where appropriate. after all, whether the fiscal cliff happens or not, cap gain rates go up at least a few percentage points that kick in on jan 1 anyway. >> right. >> there's a reason to sell the you're looking to sell. >> mr. jones, where does fair value reset? and what happens on the possibility that the president and boehner really do come out locking arms even unlikely as that may seem right now? >> i actually disagree. i think it's very likely they come to an agreement. >> really? >> absolutely. we have a very normal pullback to the 200-day moving average,
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maybe through it. we are locking for support at about 1370 and think it's a buying opportunity. >> and a big reason -- >> we're very, very, very close and trying to cling at 1400, the first technical support. we think that the fiscal cliff, the people who are really worried about it i think are failing to understand the big change in political dynamics since the debt ceiling fiasco of 2011. the republicans went in to the negotiations with very little reason to compromise because the president given him what they wanted. extension of bush tax cuts and now a very different situation. the tax cuts expire at the end of the year. and in addition to that, the election they were worried about in 2011 was the presidential election and how to best position to recapture that office. now all they worry about is 2014. if they drive us over the fiscal cliff, they will be blamed for the subsequent recession.
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they know it and can't afford to take the punishment for that in the 2014 midterms. >> michael, i'm somebody sitting at home and after the 300-point decline, is the risk at this point to the upside or downside on the markets from now to year end? to the downside, we have the selling you mentioned. people looking in gains, concerns about the fiscal cliff, the laundry list we have talked about. to the upside, though, we have two olive branches. harry reid and john boen we are the olive branches to each other and maybe seemingly willing to talk and maybe risk to the upside in terms of a bargain being struck. when's the risk? >> i think that's the big uncertainty. the optimist in me love they come together and have a good deal for everybody concerned and we move forward. the pessimist says i heard nothing different yesterday despite the press conferences. and neither side really has a mandate to impose their will on the other. and in fact, i see very little
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difference as i'm sitting here today versus where we sat on monday and so there's very significant reasons why there could not be a deal. we hope there is but the devil's in the details. what kind of a deal will we strike? the one the markets like and going to be effective for long-term growth is going to be the one with true reform. whether it's regulatory reform, tax reform, reduction in marginal rates and exchange for getting rid of some deductions. i think that's a good plan but did devil's in the details there. and i haven't heard anything different yet. i have heard everybody's circling around each other trying to make the first move at this point. >> right. >> we're optimists and hope they get it done because i think it's best for the economy. in that instance -- >> i mean, how are you positioning the portfolio? i asked -- are you positioning for the risk to the upside or to the downside? it seems to me like you're saying to the downside. >> well, we balance out our
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risk. we are diversified. we like equities in the growth areas that have been beaten down and sold off quite a bit yesterday. the energies, the industrials. those sorts of things. but we are also keeping powder fresh in bonds and fixed income to guard against the fact that if we don't get much done or the right deal done, we could go in to recession their and slowdown periods, you know, next year which given what's going on in the rest of the world could grow in to a global slowdown. >> interesting. we have all become political scientists in the last 24, 48 hours. thanks so much. >> thanks, carl. this stuff impacts what we do every day. one retailer seems to be giving consumers what they want. over to mary thompson at headquarters with a market flash. >> lei there, melissa. consumers and investors, look at di dillard's department store. well above estimates of 72 cents and same store sales up healthy
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5% and revenues coming in ahead of expectations and 1.45 bill$1 billi billion. investors like the news. >> welcome back from florida. great work this week. shares of apple sliding over 20% since the all-time high back on september 21st. question is, do we go down more from here? later on, the changing of the guard. over in china. we'll take a closer look at the challenges and new leadership will face and means for the rest of the world. don't go away. it's about who lives in the yellow house, the green, and the apartment house, too. today we not only honor the oval office, but we honor the cubicle, and the home office as well. because today it's about all of us. and no matter who you are, you're the commander-in-chief of your own life. ♪ you're the commander-in-chief of your own life. wooohooo....hahaahahaha!
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welcome back. let's take a check on shares of apple. this happens in just the past 15 minutes or so where we accelerated the losses to the downside. now we are down by 1.5% or so. officially in bear market territory as of yesterday off 20% from the all-time high of 705.07 of september 21st. eric jackson is a long-time apple holder and a "forbes" columnist. thank you for being here. >> nice to be with you. >> you're an apple bull but you have to be worried a little bit. a bear case is made on the technical side and the technical side you know down 21%. it's breaking through supports that it should have held such as the support made in july the next stop in terms of support is the may low of 528 and approaching that right now and on the fundamental side, we have had an earnings miss on this. no clarity in terms of new
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product categories in a couple of months. >> yeah. i respect the market technicians and how they look at it. i mean, what i pay more attention to and i think what is bullish right now is just the chatter, the sentiment you hear in the stock. i mean, it's really amazing since the 705 level you talked about in september when you didn't hear anything negative about the stock. how much we have shifted to the other side of the boat and now really very hard to find anyone coming out and saying anything positive about the stock. you know? i find that bullish. 20%, 21% is a big pullback and compared to what we've seen every year for last eight years and apple and sort of right in the middle of the range healthy pullback and to me it seems overdone. i can't predict the future and what might happen with government and so forth. and it's a big liquid stock but i think there's less risk right now in getting in the stock than
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there was at 705. >> eric, i wonder. melissa brings up the execution risks in the company but others have pointed out, look, great gaens near to date. if there's a fiscal cliff issue and tax rates go up, cramer called it an ultimate fiscal cliff stock this mitt romneying. do you think it's more about macro cliff concerns than the pop line that jobs left behind? >> i think it's both. i think it's definitely as the largest stock in the world as we get towards the year end and concerns about taxes, increasing and so forth. i think it does make sense that people are going to try to take some of the gains that they have had year to date off the table and there's just chatter about the fundamental operation of the company. now, i'm not one that buys in to any of those fundamental arguments against the company. you know? i take issue with that and the other side of the trade. but, you know, i think it's both weighing on the stock. >> i think it's important for investors out there to understand where you're coming from, eric.
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that's the cost basis. what's been the cost basis on apple and assuming you bought it a while ago and added to the positions lower than levels right now. would you yourself be inclined to take money off the table to protect yourself from taxes? >> i wouldn't at this point. you know, we have positioned and we have bought the stock, you know, at the beginning of the run in 2009 and then bought and sold throughout. usually with a big core position in the stock and so, right now, given where the stock is, you know, even with the risk that is out there with the end of the year, i think this is such a pullback in the stock that, you know, it is just as likely to turn around in the next few weeks and be there to participate in that. >> what would bring about that, again, reverse in sentiment? i remember a few months ago, people saying it's a value investors play in the closing
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months of the year. if that is happening, i said this yesterday, they're being patient, eric. >> well, i mean, just a year ago, i mean, basically, in november of last year this stock was -- got down to 360. you know? it dropped 15% from 425-ish to 360. and at this time last yore, i mean, there were a lot of people. i remember market technicians saying we broke -- we got to 360. you know? i see a straight down down to 300 and then in the fourth quarter and anticipating how well the quarter was doing for the stock and doing and suddenly that sentiment changed on a dime and the stock went on a run november to march, april of this year. so it's -- you can't predict it it. it's not that easy. doesn't happen the same way every year but this is the holiday quarter. >> eric, you have indicated you bought and sold through not just a buy and hold forever investors
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necessarily and i'm curious. you mentioned the sentiment why you're holding on now. there's such negative sentiment on apple it's worth holding, it's wort owning and buying here. same time, when apple up at 705 and everybody so optimistic on the stock, did you use that as a contrarian indicator to start trimming at that point? were you trading the stock around that high? >> we traded it before that high and missed out on the highs. we traded in the mid-600s which was early. but the stock had obviously had a huge run to 600 from 360 of this time last year. so, you know, it never goes in a straight line. i think i said that several times on the show. always pullbacks and you sort of are to pick your spots but for the guys coming out and talking about shorting the stock, you know, presenting their arguments, i think those are technical traders and more power to them and they have made good money hopefully on the 20% pullback and take a step back
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and really realize that i think there's a lot more risk now considering shorting the stock and 550s, 560s compared to back 700. >> that would -- i guess that goes without saying. eric, thanks so much. talking to you next time, eric jackson talking some apple. interestingly, everybody references 1111. >> yes. >> almost roughly halfway there and kevin points out. >> more herculean now in terms of the price target than 705. >> with apple well off the highs of september, taking a further slide right now, we wanted to look at other stocks with parabolic moves. herb greenberg digging through the numbers at headquarters. >> you know, carl, parabolic is all in the eye of the we holdbe and i look at apple and doesn't look like the momentum and reverse of so many names. for example, as a baseline, look at a company like green mountain. you look at that chrt and you can see a stock that, you know,
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really went up and really popped and the difference in, say, a green mountain versus an apple is apple never looked expensive. green mountain looked expensive. companies like apple and the other stocks to discuss, people are welcoming for variables. things that are starting to change that will take an overbelief stock as jeff put it yesterday on our air when he was talking about apple and sort of, you know, try to make a difference. so let me give you an example here. ibm. ibm is a company if you look at the stock, the stock is trading at about -- is trading at 11 times earnings and negative revenue growth. the company isn't coming out and look at the stock. that's been a parabolic move to look at it. it has a lot of believers. the company isn't raising estimates the way people might have expected. people are starting to lock at this one sort of the way they looked at apple looking for anything that even though it doesn't look expensive to cause the stock to start to come
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undone. another example, this is like ibm, a well managed company and going to surprise you. home depot. here we have -- i'm a huge frank blake fan. but look at the stock. straight up. but you have got a company, 18 times earnings. it's got a revenue growth of 2%. so people look and say, you know, when's going on there? how long will the street believe? so these are the other types of parabolic or quasi parabolic moves to look at away from the green mountains with the big momentum moves. >> i'm curious in terms of the parabolic stocks, is there a time tram? multiyear doesn't seem like parabolic. >> some of them -- look. we have the momentum stocks and going on for several years. i've been doing this a long time and sometimes, you know, i'll start talking about a company and the stock's going up and the stock goes up for a year. goes up for two years. the stories take a while to play out. i don't think there's any sort
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of i usually use the word, no one size fits all. take a look at an apple. you know? it's a different animal altogether and kept going and going until there's a -- you know, people were looking for changes. i quote a piece october 2nd about apple pointing out the subtle changes at company that might cause people to rethink the reason to invest in the company. again, you know, there is no time frame. >> all right. herb, thank you for this. >> sure. >> financials getting a pop today. jp morgan with approval to restr resume the $3 billion stock buyback program. let's bring in brennan hawken who joins us. good to speak with you. >> hi. how are you? >> good. thanks. you look more carefully at the moves of banks today and fairly muted given the sharp selloff that we saw in yesterday's session. seems like moving more stock specific. bank of america with a big upgrade of isi and the rest sort of trading in line with the
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markets. at this point, brenbrennan, i t they're concerned of keeping dodd-frank intact and heard they're concerned of elizabeth warren to the senate. has the risk profile for financials changed with the election? >> yeah. so, what i'd say and what i'd point to is a conversation we had back in late september, actually, when i downgraded the group. it was my view that there were several risks to the group that were not necessarily reflected in valuations at that point and we're right about the same valuation still and even though it's six weeks ago, they haven't moved much directionally. what i would say and what i said then was that you got elevated political risk. that political risk on both sides of the atlanta and that's no more or less in my view really today than it was back then. we just had seen an event that's crystallized the idea in
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investors' minds. >> did you -- was your call back then based on elizabeth warren winning? >> no. >> did you predict that? is she more of a whipping boy for the industry or yield real power? >> well, she is a single senator, right? i wouldn't overstate that one issue, per se. what my only point is we have elevated political risk and we have got regulatory uncertainty in the earnings power and all -- what we have seen probably running in is good deal of optimism in the stocks in some outcomes coming through that didn't quite happen. right? and then instead we had what most folks who watched the polls would say would have been pretty predictable but it was viewed as a negative catalyst and so much optimistic in the stock. >> right. now, brennan, these stocks live in staort of a bad place in the
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market in terms of as you mentioned the political risks there now and, you know, are more certain and crystallized an enthen we also have the postings year to date gains and nice gains over a couple of years and might be the targets of tax selling if you're of the belief that tax rates will go up next year. are you hearing some clients that that is an impetus to sell? >> i actually haven't heard that. that's a little bit more sort of probably client specific but i could see that as being episodic. if you have got a portfolio manager who needs to offset losses in other positions, there's always a risk there. and as you point out, the stocks run up nicely. stocks trading as a group and the big banks and the brokers trading a little over 80% tangible book value right now. my estimates have them earning about 9.3 return on tangible book and when you consider the fact that you have got a 12%
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cost of equity, that's fairly valued at this stage. so, it's fairly valued given the return outlook and it doesn't give you a margin of safety given some of the risks in the system. so, it -- that's the reason why we'll move to the sidelines and i'd certainly on this pullback, i think there's still risk to come and i would not be moving aggressively. >> all right. brennan, great to speak with you. meantime, mcdonald's big story today missing same store sales expectations for october. 9% off the 52-week high. it's the company can't stand the heat of competitive pressure, what do they do next? do you get out of the kitchen? back in a moment.
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take a look at shares of aping dropping in the just 20 minutes time. but down by about 2.4% as we're talking to long-timeshare holder eric jackson. bullish and said the sentiment is so negative, why not own it? but not many people convinced by that right now.
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>> yeah. more power to him. >> yeah. exactly. >> described the tech tall traders or people trading on momentum in the near term. mcdonald's droppireporting a dr same store sales. could it be the beginning of a bad trend? on the cnbc news line is nicole miller regan at piper j affrey. >> good morning. >> were you looking for this number on global? >> more over less. looking at the regions and some cases worse or better but overall pretty much in line with us and the street. i think that's why you don't see a big reaction in the stock this morning. >> yeah. people have been -- yeah. i think -- what would have been a big reaction? 84, 83 opposed to 86 and change? >> yes. i think -- i mean, i an i gree. the questions and the derivative is qsr dead?
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is the space falling apart? >> and answer to that is? >> i don't think so. interestingly, we have ahad a number of reports and they're all in positive comp territory and so is sonic and looking at this and say, hmm, mcdonald's suggested some competition in their press release hurting them an they don't usually call out, i think there's certain brands fundamentally better than where they were last year, five years ago like a sonic or a popeyes and those like burger king that's making fast strategic decisions and gaining awareness. >> nicole, what is your ratdi i on mcdonald's? it is not just the flagging of heightened competitive activity but they also said specifically with u.s. sales modest consumer demand which was a red flag to me at least. >> i hear you. it's a modest consumer demand
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and yet we can point to three or four other qsrs up domestically but adding all of those up, wouldn't account for this shortfall in domestic comps meaning there's a lackluster demand overall. what's difficult is this is a beast. this is a large cap well traded stock and the other ones are, you know, small to mid cap at best and they oftentimes fall in to two different investment-type categories. while mcdonald's is not necessarily exciting but it depends on the big picture and if it is truly consumer slowing or lackluster demand, sometimes this is a nice defensive way to hide out. >> that's been true. >> but it's not defensive thissier. >> until now. right. we forget the great year last year and did change, nicole. i wonder on the u.s. front before we get the inventory
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numbers here in a few second, people say the execution is bad or pipeline is dry. do they realize the fire is close to the living room? >> well, they have great execution. but they have very difficult comparisons. to some degree, the victim of their own success and it's actually just getting more and more difficult for the remainder of the fourth quarter. >> yeah. the comps, comps are tough. no question about that. nicole, thank you so much for your time. fascinating story. >> let's get to sharon epperson. breaking nulls on nat gas inventories. sharon? >> prices off of their lows this session and inventories came in a little bit less than expected. the market was expecting to see natural gas supplies rise between 26 and 30 billion cubic feet and last week rose by 21 billion cubic feet according . we have been above the 350 level
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mark in this session. i'm bringing in alan harry, ceo of spartan commodity fund. when's the price action tell you? what's the build-in supply? record storage level for natural gas. >> number came out. wasn't the bill they were expecting and bullish for natural gunshot and seeing right now in the marketplace. on the east coast, we have had infrastructure outage with lack of furnaces to use the gas. >> you have a lot of fans in the background. >> so what i'm looking at right now is as soon as the infrastructure is back up and it is getting, more natural gas use going to be used. we have a cold east coast right now i see it rallying. >> we are looking at one-year level. year ago levels, above that. above the five-year average here and plenty of natural gunshot. >> there is so much natural gas. so, longer term i'm bearish on natural gas. the reason why is because of
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that huge supply that we have. if we have a warmer winter coming up through december, january, february, natural gas could go down to ze are. >> wow. the prices at zero. how do you play? you are looking at crude oil today, as well. in terms of crude oil versus natural gas play, what are you looking at? >> right now, looking at breakibreak ing $54, i'm short crude oil at that level. natural gas breaking 350, i'm short natural gas. break 365 of natural gas, i get long. i think the high is 380 to $4 for the rest of the year at max. >> all right. there you have it. we are looking at natural gas right now around 3.57 and heading back to you at the nyse. >> all right. thanks, sharon. people watching to see crude today and an overall sense of sentiment right now. when we come back, the markets looking better today after a 300-point plus selloff. could it be worse? are the technicals pointing to
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optionsxpress by charles schwab.
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little more than an hour in to trading. some of the stories, 7:35 on the
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east coast. 10:35 on wall street. freddie mac said 3.4%. norfolk southern falling to 14-month lows. shares of the giant in bear market territory. down 23% in the past three months and pfizer suffers a defeat. canada's supreme court ruling a patent on viagra no longer valid. they claimed pfizer not provided details filing the patent on viagra expiring in 2014 in canada. major market indices trying to hold on to gains at this point almost at the flat line after yesterday's massive selloff. let's take a check on the charts here. katie stockton with mkm partners. good to see you especially on a day like today. as far as the major market indices, seems like key levels right now. starting off with the s&p 500, we are below the short-term support. what are we looking for right now? >> yesterday's decline is significant. it did lead to a breach of
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short-term support levels but that's s&p 500 within reach of the 200-day moving average right around 1380 an expect a tets st that in the days ahead and maybe a false breakdown or a shakeout and after that i think a nice intermediate buying opportunity at hand. >> so basically this is a pullback within a longer term higher? is that the takeaway? >> i think it is. we have seen about 5.5% downturn and we have not lost positive long-term momentum and we have to remember that the breakout in september targeted about 1530 for the s&p 500. i still think that's achievable as early as january of next year. so to me there's still upside in the market and we're oversold for the first time since june by some measures. >> okay. we have just turned negative on the dow and s&p. the dow testing the 200-day
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moving average. what sort of level are you locking for for support at this point? >> very close to current levels, in fact. as a test 200-day moving average referring back to june with a successful test of the same level and to me this is a very important support level. obviously, we have psychological significance around the round number of 13,000. but i think at the end of the day we'll look in hindsight and see it holds albeit with a hold test and looking for a rebound after the next several days generates an extreme short-term oversold reading and not there yet. >> you have been bullish as far as technicians go. looking ahead in to 2013, i think a few weeks ago calling for record highs. has anything in the past week or past few weeks caused you to start to question that call? >> if anything, we have certainly lost momentum but to me a short-term phenomenon and at this time we have seen some
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constructive developments in the market internal measures. leadership pulling back and getting constructive and sentiment is more constructive. so to me, we have to view it as a short-term development with no changes to long-term bullish view. >> in terms of a change to a bullish view, we have seen that in shares of apple. should investors be concerned on a technical basis at the this point, katie? >> i would have said a couple of weeks ago but as of yesterday we have counter buy trend signals in apple with support around 550. that's a very important support level. and i think we'll see it act as a staging ground for at least the relief rally. of course, before diving in, i like to see stabilization, meaning short-term improved momentum of apple and notice it did gap down on the chart yesterday and more characteristic of an exhaustion gap meaning at the end of a move opposed to beginning of a move and of course on september 24th gapping down. >> and i think that lot of
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investors think how you do you get to the 550 level and identify as a key level there rather going to, let's say, may lows which were 528 or so. >> right. so i look at levels as cushions rather than precise points. the 550 level happens to have significance based on something called a ratio and also some other more obscure technical models i use an it's a round number and important level for it. >> good to speak with you. >> thank you. meantime, china's communist party is gtherring to select new leaders. leadership tradition is once a decade. cnbc's eunice yun joins us and the importance to the global markets. good morning. >> reporter: good morning, carl. well, over 2,000 delegates are here in beijing to choose the next leadership of the country and significance because it's a
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world's second largest economy and a lot of people here are hopeful that the new guys are much more reform-minded than their predecessors and that could open up the economy and eventually lead to more opportunities for american companies. >> eunice yoon in beijing, fascinating story taking shape. some of the pictures of the national people's communist party and only eight years away to double per capita income of the people. a tall order. >> the ceremony is extraordinary. they go in to the meeting and then week a later walk out of the chambers in the order of seniority. that's how you know the leadership has been chosen. >> right. >> so it's a fascinating week ahead in china. speaking of china, a company looking to get out right now of china, mary thompson's got the story. >> hay there, melissa. monster online. the shares up 17%, 16.5% today.
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the company is announcing a restructuring aimed to save about $130 million annually and part of that selling the china business. this on the heels of the company reporting a third quarter loss and providing positive guidance for the current quarter and expects to earn between five and ten cents a share. so there you can see its shares up 17% on the news. melissa, back to you. >> mary thompson, thanks for that. walmart moving black thursdfriday up to thursday. "squawk on the street" is back if two.
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let's invest in our teachers so they can inspire our students. let's solve this. walmart announcing today to move up its black friday sales to start an 8:00 p.m. on thanksgiving night. you will have barely finished dinner. earliest start ever. joe feldman joins us from new york this morning. good morning.
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welcome. >> hi. thanks for having me. >> a couple of hours earlier than in 2011. at this rate, we might start the monday of that week in a few years. when's the upside for this? does it matter? >> i think it creates buzz and excitement and people in to the store. one of the things that was kind of interesting is they will have a one-hour guarantee from 10:00 to 11:00 in line, you get guaranteed access to one of three different electronic products including an ipad 2. >> bluray. when's the third one? >> a tv, 'emmerson, i believe. >> looking at 4-1 for the season. in terms of growth down from 56 last year. when's your view? 'we are looking for 3.5 to 4.5%. we put out the holiday preview today. 3.5% to 4% is total sales and that's for the publicly traded retailers and same store sales a 2% to 2.5%. i think it will be an okay season. i think walmart a big winner this holiday season.
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>> carl asked about this and to that point, you know, gets people in the stores but does it just fall forward? that person online wednesday night isn't that the person that would have gone a thursday at midnight instead? what degree does it encrease traffic and sales and then a question about what price because you're discounting everything and the margins go down. >> i think it's about extending the season longer for one. two, market share. if you're open when your competitor's not open it gets people in and buying and maybe get that item. if you're sold out of it you may 0 go to the come pet or the and find it there but i think it helps a little bit. you are right in aggregate. the most important selling days are ten days prior to christmas and helps the season. creates buzz. an early jump start and doesn't necessarily mean tremendous amount of incremental sales. >> we had a discussion this morning about how the sector at large all yearlong, people want to count it out. it's a critical part of the
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year. and some of these inventory guidance levels from companies like kohl's, are these companies going in fat? is the fiscal cliff worries accelerate are we left with a lot hanging on the racks? >> we're a little concerned a that could be the case. you heard of kohl's today that said that. others have not. we were lean. next week again from the retailers and what we have seen is relatively lean inventories. people, companies told us they purchased lean for the holiday season and rather sell out of something and then with hurricane sandy, there's a little bit of disruption in the supply chain. being a touch fat may not be bad for the retail earls. >> last question, joe, you know, we call it black friday for a reason. this is a very important make or break time for a lot of the retailers. literally, make or break for whom, though? i mean, you think about somebody like a best buy competing with
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walmart. how far are they along here? >> yeah. you know, the make or break has become more for some of those players like a best buy or a toy category or even people very heavy gift giving oriented items. fourth quarter is huge. can be half of the earnings. william sonoma is like that. there's gift giving of certain retailers and watching closely with the trends in the stores. >> do you have a favorite name? >> i'm still a big fan of walmart and target. they have good holiday seasons especially with the economy as it is right now. i think they're well positioned and very competitive on price. >> joe, thanks so much. see you next time. >> thank you. in the next hour, adding insult to injury. the northeast shoveling aside heavy, wet snow a week after superstorm sandy. a damage report in just a few. hr he's climbing everest, scuba diving the great barrier reef with sharks,
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or jumping into the market, he goes with people he trusts, which is why he trades with a company that doesn't nickel and dime him with hidden fees. so he can worry about other things, like what the market is doing and being ready, no matter what happens, which isn't rocket science. it's just common sense, from td ameritrade. heartburn symptoms causedelieve by acid reflux disease. osteoporosis-related bone fractures and low magnesium levels have been seen with nexium. possible side effects include headache, diarrhea, and abdominal pain. other serious stomach conditions may still exist. talk to your doctor about nexium.
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the euro hitting a two-month low this moment and moments ago
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a possible snag in greece getting its bailout money, putting additional pressure on the euro. with the picture getting bleaker in europe by the day, has the pain just begun? ians norvick, and just for the viewers at home, this is the headline that crossed eu ministers to delay greek aid call for weeks so that adds uncertainty to the picture and certainly for the euro. >> that's right. the greek situation has been a constant source of uncertainty, and we thought we might get resolution next week, but that doesn't look to be the case anymore. >> how should investors think about it because there's this uncertainty in europe and the ecb came in pretty much as expected and the o.e., certainly as expected and on the u.s. side of things and ben bernanke, his tenure is intact and there's no threat to monetary easing continuing in the future. >> yea. i think on the european side the
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big negative is that spain has yet to apply for aid, so that's a factor that is definitely weighing on the euro now and then on the u.s. side, the fiscal cliff concern is something that's adding to risk aversion and that's also putting downward pressure on the cross, and that's putting downward pressure. >> it's putting downward pressure the euro and the fiscal cliff so then that means just as a bottom line for people out there that people are still looking to the u.s. dollar as a safe haven currency each as it looms which seems counterintuitive. >> it has to do with leverage in the system and when leverage tops everyone comes back to the dollar so that's the mechanism that's at play here. it's a tricky trade at this point. at this point you would say don't do anything on it, but on a spike you'd be inclined to sell. >> yea. i think the important thing is that it's not the same environment as the summer. in the summer we had a big euro downtrend. we didn't know what the ecb
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would do. ecb's there now to provide back steps so the moves will be somewhat smaller and that means you'll have to be careful with the entry point and if you have a spike it would sell out again. what kind of spike are we talking about? 129 or so? >> and walk us through the levels there on a possible trade. >> yea. so if we have a spike up to 1.29, you can trade it down to 1.26 and it's a good risk reward. >> it's good to see you. jens nordvick. be sure to catch "money in motion" at 5:30 eastern time and check out "currency class" at "money in motion." that trade is getting more interesting, that's for sure. >> financials bouncing back a bit today after a big sell-off yesterday. one of the street's top analysts mike mayo here to tell us which banks are worth investing in. that's ahead on "squawk on the street."
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chances are, you're not made of money, so don't overpay for motorcycle insurance. geico, see how much you could save. got a lot to talk about tonight with a very big name. >> yes. two words, carl icahn. we were talking about take two after icahn moves up his stake for the second time this week. also, he has developments on osh
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kosh and he's not looking to take it private and we'll talk about his straty. >> reporter: for these two companies and netflix all tonight at 5:00. so big move there. >> interesting to see him making his move once again in media having played around in all different sectors over the past year. >> netflix and take two, it's not clear what the road is in terms of what an activist can do for these companies so it will be interesting to see what his game plan is and if he reveals anything because sometimes he holds his cards tight to his chest. >> we'll see you tonight at 5:00 eastern time. if you're just joining us, here's what you missed earlier on. >> welcome to hour three of "squawk on the street," here's what's happening so far. >> i'm more worried about a 1936-type of reaction which would be a policy mistake that puts us back into recession. claims? claims actually moved lower to
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355,0 355,000. i spent a year of my life on bulls and i hate things on every page, but i voted for it. the only thing worse than being for this is being against it. >> they want a double per-capita income within the next two years. >> i thought that was amazing, but it's a command -- the economy maybe they can pull it off and if they can do it they can take the whole world with them up. >> you want to be partners with starbucks, not enemies with starbucks. ind india, by the way, starbucks are doing very, very well and i think green mountain would do best to bury the hatchet before it's buried right through their head. >> everybody knew how consumers would react to things every hollywood movie would be a blockbuster. so i look at it and we'll build the enabling technology and we'll be here and make sure we make the investments with rnb to make the products better and
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better and better. good morning. we are live on post 9 at the new york stock exchange. we are following the bruising 213-drop, the nasdaq down a couple. if you're looking for silver linings at this hour you might argue that crude is up 34 cents which is being seen as an indicator of broader sentiment regarding the global economy. qualcomm after its quarterly results handily beat estimates thanks to the increasing demand for chips and paul jacobs was on the show talking about the importance of smartphone sales. >> you look at the smartphone numbers there were 3 million smartphones sold in the year and you look at the knock-on effect for us and we had average selling prices go up 6% and that helps our licensing business. we tripled the shipments of our
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flagship snap dragon ship and, you know, things were really going strong on this smartphone side. >> meantime, kohl's, one of today's biggest losers after reporting a disappointing fourth quarter outlook and inventory is relatively high and the department store chain cutting its guidance for the year. the markets are trying to find their footing after the big sell-off yesterday. we'll tell you how you should be positioning yourself in what is now a post-election world. apple shares continue into bear territory. is it time for investors to give up or is this the buying opportunity of a lifetime? plus how to play the financials now that the president has been reelected we'll talk to mike mayo of clsa. he'll tell us live what the banks need to be successful and grover nor quist would weigh in on the fiscal cliff and find out why he thinks the republicans will give a mandate to hold their stance against any tax increases. we'll start with apple and the stocks sitting in bear market territory, the question is is this the time to buy or will the
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stock continue to slide? andy hargraves is at pacific crest securities. good morning to you. >> hi. >> 12.6 multiple at 5.58 here and how cheap does it need to be for value investors to move in? >> i wish i knew the answer to that. >> so do we. >> i could solve a lot of people's problems. i think we're pretty close, quite honestly and there are obviously very real issues in terms of slowing growth especially post the iphone 5 product cycle and we've seen the signs of some limit to how high the gross margins can go which means your profit isn't going to grow the way it has in the past, but we're accounting for a lot of that at this point. you're trading at 10.5 times my 2013 number and with the amount of cash these guys have on the balance sheet that's pretty darn cheap. abc news has had a lot of discussion on twitter, working on a report for nightline that
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asks the question whether the company's lost its shine, not that that matters in terms of cash flow or the return on equity, but i wonder if you think the sentiment here is reversing in such a way that we are underestimating this dip and that there might be more to come. >> well, you never know what will happen in the short term and there certainly could be more to come just from momentum, but i think the whole, you know, has apple lost its shine thing is pretty overdone. this company has performed spectacularly well. >> that was in the past, though, andy. they're curious about the pipeline going forward. we know what a great run it's been. we know what a great year it's been and what great series of products they've brought out and is that a tell regarding the coming holiday season? regarding 2013? regarding television? >> regarding the coming holiday season, no, i think it is a teller, i should say.
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they're selling every product they're making right now. i think the question that is being alluded to is is there another market opportunity that is as big as the phone and the tablet have been, and i think that's the real issue here is not that, you know, have they lost their shine? are they losing their ability to execute. they're a $600 billion company almost, and you need multi, tens of billion, if not hundreds of billions of dollars of new market opportunity to continue to grow and that's probably not going to happen. >> really. so that takes off the table any kind of large platform potential in china? overseas, middle east, africa? why is that happening? >> i'm not saying that. i think there's still opportunity to grow within the iphone and the ipad product lines, but not at the pace that we've grown over the last few years where we're saturated at the high end of the smartphone market which means there's some
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incremental opportunity for share gains here and some incremental opportunities and just not what we've seen and when you're thinking of multi-year growth of double digits or something like that, the smartphone market and at least the high end of the smartphone market is probably not going to cut it that the point and it's something new. >> where does it leave you on the stock itself? the stock's been oversold. at the end of the day we look at the iphone and the ipad and we look at the profit contribution of the two products and we think you're getting a lot more profits in the future just from those line-items than what you're having to pay for. so we continue to think that the stock's worth $670 a year from now so the current discount that you're given to that price, we'd be buyers. >> thank you. andy hargraves, people tried to read the tea leaves on apple. gary kaminsky and the fiscal
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cliff, and it's good to see you. good things at home? >> not no, but we'll talk about that later. let me try to explain. we'll talk about the discretionary spending cliff that's about to hit. that's really what's happening with apple and the thing that we've talked about for so long going back to october 1st, every closet indexer had a full position and it was 12.5%, we showed you the numbers and good news if you're looking at apple, it's down to 9% from the fellows that were tracking that stuff and it will continue to be overowned and it got overowned at the right time. i'll do my santelli imitation and walk over to the board. i want to talk about obama care and in terms of real numbers. real math is always great because it does not lie. you know what fsas are, flexible spending accounts and that's the money you put pre-tax that you try to put away when you try to think about your family planning and i want to use a real-life
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example of what's happening. an individual call mead as he's doing his 2013 planning he puts in $15,000 in an fsa account and that's what he's been doing every year for a family of five. he's now allowed to put away $2500 in the same account and he knows how much he's been spending every year in terms of additional medical care and this is above and beyond and you put it away pre-tax. he now knows he's going to create his own form of fsa which is taking after-tax dollars and remember, i've tried to make people aware as it relates to dividend taxes. it's only about after-tax dollars. so he'll take after-tax dollars now and he'll say to himself, i have to put $10,000 in a separate savings accounts with interest rates of zero and not going to earn anything that i know will put that mona, way. guess what? that $10,000 is not going to be spent on discretionary spending. it's not going to buying an ipad mini and cash all dining
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restaurants. that is what people are doing right now and every analyst who follows any discretionary spending, consumer spending company is looking to the assumptions in terms of the numbers next year and they're cutting those numbers. simple math, i know we have to go. take a look at this pin, and if you've been watching cnbc this morning, rise above, and if you want to know more about this and why this is such a great campaign i encourage you to go to cnbc.com. tim, come on in here. why rise above? our eder in chief put a great piece on the website, cnbc.com. no matter what you thought of the elections on tuesday and this is something you've got to focus on because we've got a lot of problems ahead, guys and you'll understand why this is one of many and you want to know what's happening with apple? that's what's happening with apple and the sell side analysts just don't get it. >> yea. tough to get a definitive answer and well said on rise above. nick's piece is on the website and definitely worth the read. >> let's get over to mary
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thompson on the market desk with a flash. >> hello, carl. am krsh amc networks. stronger than expected revenue in the last quarter. the company was helped by a couple of thing, the popularity of the shows like "the walking dead," i've felt like that over the last two weeks and also saying on the conference call, and they reported a double-digit cash flow were it not for the dispute with the dish network and the company trading at an all-time high and this after its spin-off late last year from cablevision. carl, back to you. >> mary, you may feel like the walking dead and you always look like "america's next top model." carl, you know just what to say. >> rick santelly is with the santelli exchange. good morning, rick. >> good morning, carl. we never down here have any idea what gary will talk about, but i always smile like i am right now when what he says will play well
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into the topics i'm going to get into momentarily. how low can interest rates go? you know, when i was on the panel during election night until 2:00 a.m. and you were there as well, carl, was there a couple of off-camera discussions about supply siders and the demand side of the equation. many think that it's not paid attention to enough that the problem with the economy isn't what supply siders can fix. it's a demand problem, so gary, my hat's off to you because that is one of the unintended consequences of why consumer demand is low. it's still really at the epicenter of political, a political issue and it's a fiscal responsibility issue and it's a tax issue. all of the hot-button topics. so let's answer this question about interest rates. conventional wisdom would dictate that interest rates probably aren't going to go a lot lower. how many guests come on cnbc and say, boy, you're on really thin ice if you think buying rates down here or being long the face
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is going to make you any money. well, i contend that maybe they're wrong. let's look at some charts. chart number one. let's show chart number one. viewers, i have confidence in you. look at the chart and don't try to figure out what it is. is that a chart you'd want to buy? no. let's look at chart number two? is this a chart you'd like to buy? i'm sorry, but i think your answer is still no. chart number three. that's a chart that viewers, technicians, you'd be willing to buy. if you're really smart even though i took the names off, you probably figured out chart number one was a ten-year rate. chart number two was ten-year of spanish rates and the point is that a picture and a graph is word 1,000 words because those charts, if i labeled them commodities instead of interest rates you may look at them differently, and i understand governments have their thumbs on the scale, but consider, they
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have their thumb on the scale in spain and it still looks like a chart that's going higher in terms of rates. so can we see a 2% long bond? could we see a 1% ten-year? the charts say it's still a possibility. >> back to you. that has big implications if it were to happen, rick. thanks very much. see you later, rick santelli. it's bush a rough year for the markets and all three indices down more than 2%. we'll find out if circumstances could be setting us up for another big sell-off when "squawk on the street wt streen continues. isn't mr. margin. mr. margin? don't be modest, bob. you found a better way to pack a bowling ball. that was ups. and who called ups? you did, bob. i just asked a question. it takes a long time to pack a bowling ball. the last guy pitched more ball packers. but you... you consulted ups. you found a better way. that's logistics. that's margin. find out what else ups knows. i'll do that. you're on a roll. that's funny. i wasn't being funny, bob. i know.
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>> want to get more insights on the market this morning following the sell-off, jerry castelini and jim mccog with the principle of global investors. good to see you both. good to see familiar faces. correct me if i'm wrong, but you've been relatively cautious going into the election, am i right? >> well, yea, but i was seeing the volatility and setbacks were worth buying into, so relatively cautious near-term, but quite constructive longer term on the u.s. equity market. >> so given the effects of this week and given the issues that are suddenly on the front burner, where is your head? >> i think the unfortunate thing about this election is it didn't resolve the fiscal cliff. there was a possibility that if president obama got reelected as has obviously happened there
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would be more of a democrat flavor to congress which would have allowed him to pursue his policies. conversely, if governor romney had been elected and you had a republican congress and a republican house and you would have got more chance of a coherent policy. unfortunately, the status quo result with president obama still trying to work with the republican house means that a compromise is needed on the balance between tax increases and spending cuts for the deficit to be fixed and unfortunately, that means without legislation we're going over the fiscal cliff and into recession in the first half of next year. i still believe that it's most likely will get a compromise, but the probability of bad fiscal cliff event in a recession has definitely increased because of the inconclusive election as between the presidency and congress. >> yea. jerry, jim's right. you just don't know. you don't know with this kwng.
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you hardly know with any congress and taking a risk to your end seems risky, doesn't it? >> i guess so if that's the way you're inclined, but our belief is it's been priced into the market now for a long time and probably since the summer of '11 and from a perspective of the economy, the way stocks are valued, interest rates, it's hard to see there being any real downside here other than in an extreme case. >> even with the recession and even with the mild recession in '13. carl, we've been worried all year and the market's up double digits and certainty with the construction of the house and senate. this will get done. there will be some kicking can, if not a full-scale deal and we're going to set up for really stock market efforts. the point is that investors have been completely distracted from what's going on in the real economy and that's been a real constructive, we're adding jobs and building houses and the
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automobile recovery is in full swing, the u.s. has incredible compared to the advantage around the world and we have a very good, solid, economic recovery and why shouldn't that be reflected in stock prices yesterday. >> so you must have loved yesterday. >> i was thrilled yesterday. we were buying stocks yesterday. i'm convinced we're going to scare ourselves into probably a 20 to 30% move in the dow in the next year or so simply because no one will want to buy until it's too late. >> jim, what do you think about that? >> i would be a little bit less optimistic. i think the most likely upturn remains a 10% to 20% move in u.s. e quites upwards next year, but the risk on the down side has increased materially because of the prospect for deadlock in washington. i think what you really need right now is the new obama administration to work constructively with the republican house the way the clinton administration did in the '90s. if that happens, then, yes, you
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will see a very benign outlook next year, but i think there is a risk that that doesn't happen and that's what we need to watch. >> -- >> carl, can i make a point? we're very good now at understanding the u.s. political problems. we analyze them and we spend more time on them than we do company earnings. my point is we've gone for two years now and good companies have grown and the economy's grown and we sit and talk in all these media outlets about the political process instead of the economy, instead of the earnings power. >> good point. >> jim, the last point here is we've not yet mentioned europe and some people believe that having the election here over allows them to let that house of cards fall. bank of england giving up on q.e., even today, some unclear headlines regarding support for greece after their vote. >> i think that in europe what
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you're going see is a continued supply of liquidity to keep postponing the solvency crisis. i think the political will remains there, but it's another source of volatility. the way i'd be playing the u.s. market, though, i think the u.s. market has got the fundamental strength of american business behind it. productivity, innovation, all of the positive things we've talked about on a number of occasions. i do think that's all still there, but you have to mind the problems both in europe and in washington which could create a bit more volatility. at some point, maybe not today, you should be buying into weakness, but i think you should be going further. >> thanks so much for your time on an important day, jerry and jim, we'll see you later. 11 days after sandy slammed the northeast, the nor'easter barreling up the east coast dumps several inches of snow and knocks out more power lines and we'll track the storm next and later on one of the top analysts
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weighs in on banks in a post-election world. mike mayor, he barely needs an introduction. utilities and financials leading the way and a couple of big upgrades on goldman and bac. materials and health care are the worst performers. we'll be right back.
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>> just a little more than a week after sandy hit the east coast the nor'easter taking a toll on regions trying to recover. tens of thousands of customers who recently had power restored have once again lost electricity. maria la rosa is in scituate, massachusetts, has more on that.
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>> reporter: it is hard-hit in those areas and here in coastal new england, the wind and coastal flooding is a big concern. see that exposed land out there? that was not happening this morning at high tide. we're at low tide right now, but when we had high tide was not just the high tide, but it was whipping the water over this wall. at 6:00 this evening we'll have that same kind of concern. flooded roadways are not out of the question even as we get into this evening. with that said the storm will continue to pull away and you can see it here, probably. the wind is still fierce right now. we had wind gusts of 52 miles per hour this last hour and easily seeing gusts still close to 60 along the coast. so as we get into the evening hours, you're talking sustained winds going down maybe 30, 40 miles per hour instead of the 40 and 50 so winds will be an issue even as the storm pulls away. the great news, carl is not only we have sunshine in the
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forecast, but temperatures climbing into the 60s by the weekend for much of new england. back to you. >> an incredible story it's been for the northeast. as governor christie said he's waiting for the locusts and pestulence to come. house speaker has opened a new revenue to alleviate the debt crisis, but could new revenue have a tax rate increase? grover nor quist, president of americans for tax reform will give us his take coming up. and we'll get the close over there in just over two and a half minutes and what a day they've had as well. we're back in a moment. [ female announcer ] today is not just about who lives in the white house, it's about who lives in the yellow house, the brick, the green, and the apartment house, too. today we not only honor the oval office, but we honor the cubicle, the open-air office and the home office as well.
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>> we take a look at how the continent of europe is faring today. of course, no action from the boe or the ecb, but pretty interesting comments within those decisions. our chief international correspondent michelle caruso-cabrera is back at hq. >> let's talk about the unclear headlines related to greece. bring up an intraday of the euro. the euro was already at a two-month low on what was going on with german and export and import data and some of drag i's comments as people understand the headlines more, but greece will not necessarily get the money next week. there had been some expectation that because they voted last night on this new austerity
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package, remember we were showing you this video of the violence that was happening last night. we can show you again if you didn't see it that even though it had passed, once they had passed this austerity budget is extremely unpopular with the people that they would get their money next week. that is not necessarily the case. they still have to resolve other issues related to greece which is the fact that they need even more money than what they would need before and it's going to come from somewhere and it's not clear where it's going to come from. they have 5 million in repayment due next week and that was the big issue and mario draghi had said they would push it through the greek central bank. what had been a bigger headline from the drop in the euro was the spanish yields and they're starting to climb again and reapproaching 6% on the ten-year. spain borrowed a lot of money and they actually borrowed for a 20-year period and they haven't been able to do that for 18 months and that was a good sign. the bad sign, however, was the five-year auction which is where they got the bulk of the money
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$3 billion in euros and very, very sloppy and people started to get nervous that witness again is spain going to have access to the market? is that what's going to finally push them? remember, everybody's been acti asking, when is spain going to apply for the ecb until the interest rates rise to the level that is too painful for them. let's get back to draghi after the ecb decision and talking about how weak the economy is over there and said that greece is going to be able to wash that money through the central banking system this morning in the wake of the decision that they made last night with that vote and, but other than that, fairly uneventful. back to you. >> all right, michelle, thank you very much, and a wrap-up of the decisions made today. and bob pisani at post 9 talking about how the markets are faring after yesterday. >> a nice, quiet, boring day, but there's significant anxiety bet fiscal cliff and
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specifically about the capital gains issue. that's motivating a lot of movements in the market. take a look at the s&p 500 and it's been fairly quiet and we did fluttering around here and this is vague anxieties that they're not going to make a decision on greece for another week and a half which was not terribly surprising and there was a little fluttering and we've stabilized not too far from the bottom right now. the main concerns i want to talk about the fiscal cliff anxieties and i'll categorize them for you, very simple. just put up the full skren here and we've seen some selling clearly on fears of higher capital gains taxes and this could be irrational and we go from 15% to 20% which could be a big deal, but some people are afraid that the deal would be even higher, perhaps as high as 30% and i think that's not going to happen, but the fear is out there. we are seeing some managers clearly take high-beta risk stocks down here to protect their gains for the year that they've had and also to dodge some of the headline risk related to fiscal cliff. so taking down risk a little bit is clearly going on, particularly with the high beta names that have gained the most
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through the year and what's gained the most for the year and what's the stock everybody is talking about, of course, is apple. apple, put up apple here, the important thing about an cell we've seen a little bit of a move on apple in the last couple of days and it's beyond the fact that apple has had a very ugly time since they announced the iphone 5 on september 21st, the stock has been essentially moving down, but in the last -- yesterday and today it moved down more aggressively and that's clearly related to some of the fiscal cliff anxieties, and i know gary made comments about the discretionary spending and i agree with that, but over the last two days it revolved around the capital gains tax anxieties and to protect the gains overall for the year. an sail bit of a brocken stock right now. let's move on and talk about the bank stocks right now. i was very encouraged that j.p. morgan finally announced they'll renew the buyback program. the important thing here, the government suspended it when they had the whole problem with the london wail.
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it's a good time to stop after a ve very, very difficult day. this, in my opinion is the key group to watch today. they've got to at least have modest gains for the day. >> we'll talk about what that meant today and interesting news out of j.p. morgan. time for another "capital markets op ed," and issuing w n warnin warnings, and say hello to mike mayo, as well and just so you guys know, and just so you know there's a great call in the technicals and it will reverse today, and he wants to know it's all been reversed today and i'm not that sure about it and i must address the pinheads that are writing it to me. you understand the government, the state of new york controls the utility on long island. so i want to put that issue to bed, that's why cuomo runs the board and lipa is a utility and not a public company run by the
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government. cult of equity killed off by pension funds and it's fascinating stuff. you know i'm obsessed with this kind of stuff. uk pension funds now hold more bonds and equities for the first time since the cult of equity in the 1950s says one of the leading city fund managers. here's the point here. we've talked about this for months now. this is an asset allocation that's not going to reverse. the fact that they're not receiving anything in many of these fixed income instruments, the survey of these people say they don't care, so they're not going to make the shift. a lot of people, the same people telling you to buy apple at 700 are telling you to be short bonds and these are the people that allocated the money and guess what? they're north of 50% and they're not changing it. one last thing, carl, after that piece we did at the top of the hour, i'm inundated with e-mails and i'm trying to give it to you, in terms of looking at the fsa and the impact on discretionary spending, you won't believe how many people
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have reached out and said we are right, we're not going have the same type of spending money and that's just one example and i'm arguing with herb greenberg. trust me. if you're an analyst that does revenues based on discretionary spending you will cut your numbers and ask mike mayo on that. he'll probably agree. see you in a few. >> let's get back to mary thompson at hq with the "market flash," hi, carl, this is the worst-performing stock in the dow and it is accelerating as we speak and cisco is down 2%. very heavy volume today ahead of the earnings on tuesday, volume over 22 million shares and on average over the last ten days and it's traded about -- excuse me, 33 million shares and of course, we're seeing heavy volume in cisco. no headlines and we're keeping watch on that. back to you, carl. >> that explains that dip in the dow, some 31 points and rick santelli is in chicago and looking at global markets and treasurys.
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good morning, once again. >> good morning, carl. i'd like to welcome our guest, adrian miller and he's a global market strategist for gmp securities and he's in new york and they're basically a canadian securities firm. welcome, adrian. we had two central bankers meet today and two central banking organizations and ecb and mpc for the bank of england. on the first score, basically you had mario "the bazooka" droghi say it can begin maybe in the near future because he smells a recession. what are your thoughts and why did the market move so little today on the press conference, adrian? >> i don't think drogy said anything, in his comments where he brought into play the german and the deterioring a in the german economy in the states in the eurozone is beginning to
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feel the stress of the whole debt crisis which is the problem since germany has been a stalwart for much of the problem. i don't think he said much and he'll have left the door open for additional rate cuts which many people liked although it's debatable as to whether that will do much for the economy and so forth and the fact that he has a bazooka is out there waiting and that again, everyone is waiting for spain to say something and what they said earlier is that mario will not ask for aid until the gun is put to his head in that case it will be a funding cost at 6 1/4%, to 6 1/2%. >> our bond purchasing program has less and less zing. that's, of course, assuming it had any real zing at all in fixing the economy. so you have mario droghi saying recession is coming and we're getting ready for the bond purchase program and now look at the monetary policy in the bank of england. they have halted any more expansion bond buying and the
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reason? they don't think it's helping. they want to concentrate on stimulating and finding growth. both sides can't be right, adri adrian. what do you think about what the mpc said today? >> the mpc is one of the few areas where you have the fiscal policymakers and the central bank in line with each other and that's why you see a little bit different situation there. they're getting help and in the case of the fed or the ecb we have a disconnect between what the monetary guys are trying to do in washington or brussels. that's the big difference and that's why you're seeing this kind of a marketedly different opinion between either the mpc or the ecb's counsel. >> the program is not necessarily going to be there to buy the economic growth and it won't be there to drive check growth and to create a safety net as we await the policymakers to get their act together and whether it be a fiscal cliff or whether it be fiscal structural
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reforms across europe. >> thank you. i like the way you split that off and hopefully you'll be a guest at a future date. thank for coming today. carl, it's all yours. >> thanks so much. the fiscal cliff is looming large. house speaker boehner says he's agreeing to new revenue, but does that mean an increase for new tax rates. grover n er norquist will join live after the break to tell us where his head is at in just a moment.
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coming up on halftime, sellers continue to lead the charge on wall street. buy the dip or go to cash. our traders have strategies to help you play the election aftermath. trading the apple bear market. is the sharp pullback an opportunity to buy america's most valuable company? we'll debate that and what the power transition in china means for your money. all of that at the top of the hour. carl? now back to "squawk on the street." the purposes of forging a bipartisan agreement that begins to solve the problem, we're willing to accept new revenue under the right conditions. what matters is where the increased revenue comes from and what type of reform comes with it. >> speaker boehner yesterday signaling a willingness to accept higher tax revenues as a cutting deal and grover norquist had anti-tax pledge and he joins
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us this morning from washington. grover, welcome back. good to be with you. >> everyone wants to know exactly what the speaker was saying yesterday. "the washington post" today writes this, suggests a willingness to break the orthodoxy of many influential republicans and surprised they didn't just put your name in that sentence. what do you think he was trying to say? >> well, he made it very clear that the republican party in the house of representatives would like to see a spending reduction plan and would have economic growth and would bring in more revenue if we could get tax reform and lower marginal tax rates and if we grew at 2% a year instead of 2%, it's what obama's gotten us to, 2%. if you grow at 2% and it's at 2% for a decade, $5 trillion in additional revenue comes in. the way you get more revenue under the government as boehner said was to have economic growth and he quite rightly says let's get tax reform to get us growth. that will bring in revenue.
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>> right. >> but we also need to reduce spending and every dollar of spending is one that obama personally put his signature to. so he'll have to undo a lot of the damage he's done to the economy over the last four years with the spending. >> the speaker had already said he was open to some 800 billion over ten years in exchange for bringing the top rate of 35 down. did you see anything new in his explanation yesterday? >> well, i think you're referring to the previous negotiation where he had said then in the 2011 negotiation that republicans would accept revenue that came from economic growth in calculating the 2.5 trillion in savings that we needed. the challenge and why the president wanted $1.5 trillion tax increase in 2011 and that was a non-starter. he wanted rates increased which was not going to happen and so eventually they just did
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spending restraint. they may just have to do spending restraint this time and let's reduce marginal tax rates and the europeans have a top marginal tax rate of 28% on their businesses and we have 35% on our businesses and obama's past loss to take for small businesses to take it up to 43%. we need to get rid of obama's 43% tax on sub chapter s corporations, the 11 million small businesses that pay personal rates. we need to take that rate down at least to where the europeans are, 25%. not up to where obamay yobama' 44. >> are you feeling the weight and brunt of criticism, not only that your pledge, some argue, hurt the senate and the republicans in their battle to take control of the senate, but also this notion that it has put a yoke around the speaker himself in carrying out this caucus? >> the pledge was a commitment that elected officials make to
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the american people and we just elected a republican house to the house of representatives that has been elected repeatedly with a majority of them, almost all of the republicans making a written commitment to their constituents not to raise taxes. obama just got reelected by 2% of the vote. 2% margin. 7% -- you've got 7% running as a war hero four years ago. he's got 2% margin this time. he got 9 million fewer votes this time than four years ago. the house of representatives just got re-elected with a strong majority and the president had pooh-poohed the republican majority saying the tea partiers are nothing and they're committed to not raising taxes. >> so you're arguing that house republicans have a mandate than the white house. >> obama never did. they actually wrote and passed a budget and a tax reform outline in the tax reform and budget
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ryan plan. obama wrote something out that he called a budget and not a single democrat in the house or the senate voted for it. what's the obama mandate? to do what? he's not mitt rom no. he can be not mitt romney for four years since he was attacking mitt romney personally, and they put forward in the ryan plan, a budget reform, a titlement reform and tax reform and they were elected on policy and not on personal attacks. >> i'm going to run out of time here. we have a thing here on cnbc called rise above and we have pins trying to get politicians to put their partisans concerns aside, if we send you one will you wear it? ? americans are nonpartisan. we would hope that people of both parties would support people, and yes. >> i'll take it as a yes. >> okay. >> the pin's in the mail, grover. thanks so much.
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we'll we'll see you later. grover norquist in washington. with the election in the books it does appear dodd-frank is here to stay. we'll ask mike mayo in just a moment. for many, nexium helps relieve heartburn symptoms caused by acid reflux disease. osteoposis-related bone fractur and w magnesium levels have bn seenith nexium. possible side effects include headache, diarrhea, and abdominal pain. other serious stomach conditions may still exist. talk to your doctor about nexium.
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financials are among the leading sectors on the s&p. mike mayor is a bank analyst for clsa and an affiliate of agricoal and just named most powerful people in finance and
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the only analyst to have made it on that list. good to have you on post 9. >> thanks. >> sounds like a large part of your argument is it's been long enough to have these laws not tied down, and not pinned down and not written, write? that's the problem. >> i say no more excuses. let's get on with it. it's been two years for dodd-frank and if you're regulators and let's get the laws written and eliminate some of the uncertainy and if you're the banks no more excuses also. at some point you have to play the ball where it lies and so it would be nice to get back to the business of banking because where we've come from is we're in a situation like japan and the real question is how much longer will we be like japan and what's worse than japan is the degree to uncertainty and look at this one example. the volcker rule was implemented to make banks safer and standard & poor's indicated they might downgrade the bank due to the
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volcker rule. nobody wanted that scenario. if they wanted to make it safer, let's make it safer and get it done. >> has political risk to the sector increased after tuesday night, yes or no? >> no. >> no one's been a bigger critic of the external risk to the banks than me for the last decade, but nothing's changed. it's an absence of a positive in the minds of some people in wall street thinking there would be less regulation, but the die has been cast. it's the existing rules throughout. >> and elizabeth warren doesn't change that equation. >> that is a newell ement, but i would say elizabeth warren's goal is to help the middle class and if you want to help the middle class one way you do that is have strong banks. in the 1950s and the 1960s middle class did quite well and that was some of the bank's strongest times. >> it sounds like you're in a position now to get more bullish on the sector if you believe, and it would be hard not to that these regulations are getting written that political risk hasn't ratcheted it up to a
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large degree and the next couple of years will be okay? >> well, we have big macro concerns out there and i have upgraded stocks and made no changes since the elections and named morgan stanley and citigroup and recommending those two stocks for the first time in four years and the reason doesn't have to do with the macro or and it doesn't have to do with the political environment and it has to do with the potential of those banks themselves and what i think we collectively have miss side what took place in europe a week and a half ago at ubs. ubs is undertaking the biggest restructuring in the history of banking and it shows the potential for bank such as morgan stanley and citigroup to optimize when they're going to do, oh, and guess what? if banks don't do it, i expect investors to speak up more often and you'll see more investor optimism and the proxy season coming up in the spring and investors are speaking up more. so what i would say is if you're worried about regulators, go
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ahead, take action on your own to preempt potential actions by the regulators. >> and you're in favor of larry fink being treasury secretary before you go? >> bring larry fink on as treasury secretary and he has the business experience as well as the knowledge of the markets. >> mike, please come back soon and congratulations on the list, as well. >> after the break, the story behind mark dreier's multimillion dollar ponzi scheme. would he do it again? that's when we come back.
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mark dryer stole hundreds of millions of dollars in a ponzi scheme in '08 and tonight on "documentary unraveled," hugh admits to scott cohn, and answers get if the punishment fits the crime. >> how many people that are condemning what a i did know for sure that they wouldn't do anything like what i did if they couldn't get caught. if what holds people from doing things like this their f.al virtue or is it fear of getting caught? i think in the case of many people it is fundamental virtue, and a mraud those people, but